February 4, 2010

35) La-Z-Boy

la-z-boy_logo

危 wēi  danger

In 1929, cousins Edward M. Knabusch and Edwin J. Shoemaker set out to design the most comfortable chair possible. Their completed design, including an innovative reclining mechanism, received great feedback but needed a name. Combining promotion with necessity, the partners held a contest. Entries included such names as Sit-N-Snooze, Slack-Back and Comfort Carrier, but one in particular, La-Z-Boy, stood out.  The future looked bright but the cousins were in for a shock when, a few months later the stock market crashed and America entered the Great Depression.  Surely this disastrous economic climate would kill their fledgling business?

机 jī opportunity

The cousins saw the situation differently and understood that it might offer the perfect opportunity to build their brand.  They did everything they could to help consumers use and buy their products.  This included extending better terms, improving service and amazingly accepting barter (including farm animals). The partners did not aggressively discount, probably aware that any price reductions would be tough to reverse once the economic conditions had improved.  The company grew rapidly and exited the Great Depression in the 40’s with a truly loved brand.  The company has continued to thrive and now employs 11,000 people.

How About…

  • Harnessing difficult times to form a greater connection with your customers?
  • Having those same customers create your brand?
  • Being creative with pricing to avoid the trap of basic discounting where possible?

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January 29, 2010

33) Bloomberg

Bloomberg logo

危 wēi  danger

In 1981, Michael Bloomberg was fired from Salomon Brothers, where he was a General Partner.  He used his $10 million severance package to found Innovative Market Systems (subsequently renamed Bloomberg LLP) with the help of 2 former co-workers.  Their aim was to provide financial software tools such as analytics, an equity trading platform, data services and news to financial companies globally.  At the time the online market for financial information was dominated by Reuters and Telerate who had successfully sold their products to the IT managers of brokerage houses and investment organizations. These purchasers valued standardization of the product above all else because this made installation and management of the systems easier.  Given these needs were so well met by the incumbents it was unclear how Bloomberg might break into the market.

机 jī opportunity

Bloomberg had other ideas– having worked in the industry he knew that it was the traders and analysts that created the value in the finance houses and that they were the key users of the services.  For them, accuracy and speed of information was far more important than ease of installation. Bloomberg built a proprietary terminal, with 2 screens rather than one, and tailored all services to the needs of the traders and analysts – he then began marketing his product directly to them on a subscription basis.  Bloomberg’s offer was so clearly superior to that of his rivals that the traders and analysts trialed it, and then pressured the IT purchasers to switch across.  Bloomberg also used this deep understanding of its users to begin to offer completely new services, for example enabling them to buy flowers and jewellery from their desks (probably to make amends for working such long hours!).  Bloomberg grew to become one of the largest providers of online financial information in just 15 years.  Incredibly Michael Bloomberg still owns 85% of the group which boasts 100,000 users in the US and 150,000 across the rest of the world.

How About…

  • Questioning the established buying processes in your industry, perhaps shifting your focus from purchasers to users?
  • Offering a physical aspect to a service with a subscription model, claiming valuable real-estate and making your offer stickier?
  • Examining other potential needs of your core users for additional revenue streams?

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January 21, 2010

31) Amazon Web Services

amazon web services logo

危 wēi  danger

Founded in 1994 by Jeff Bezos as a result of his ‘regret minimisation framework’ – an effort to fend off regret for not staking a claim in the Internet gold rush – Amazon has grown to be America’s largest online retailer, with nearly three times the internet sales of its runner up, Staples, Inc. Amazon’s growth has been fueled by continuous innovation of both its retail offer (including moving from books into broader categories and opening up its platform to third-party vendors) and its core technology. Its investment in the latter, mounting to billions of dollars, led it to begin exploring web services in order to help it manage peaks in demand on its website in 2002.  Amazon saw the value in this approach, adopted it internally and continued to build its competence in the area – eventually launching Amazon Web Services in 2006 with a data-storage service, called S3.  However, at the time there was significant concern from industry commentators that the launch was a strategic mistake with key resources, both time and money, likely to be diverted from the retail side of the business.

机 jī opportunity

However, the move made complete sense to Amazon, which above all else viewed itself as a technology company. It continued to develop its web services offer and has since added additional web based services, including online database, content delivery, and secure payment services – each of these services was born from investment in Amazon.com. The company has also been creative in how it has taken its new services to market, for example in December 2009 it launched a spot market to sell off excess capacity on its EC2 platform which allows enterprises, developers and hosting companies to bid for and buy capacity at prices set by demand and availability.  Although web services represented less than 3% of Amazon’s total revenue as of 2008, the bandwidth (number of bits per unit time) consumed by its Web services division has surpassed the demand from its better known retail websites as of 2007. The offer has helped continuous development of the Amazon platform and has given the company a foothold in some significant emergent markets.

How About…

  • Appraising your internal capabilities for those that might seed completely new offers?
  • Using auction-based pricing in order to price exactly at customers’ willingness to pay?

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